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The hashrate deep dive 1 — LTC and BTC | by Ambroid

The LTC hashrate topped out at 340 TH/s in May 2018, c. half a year after the top in price. In November 2018, six months later we’ve had a savage drop in price, evaporating the already cutthroat miner margins. Most miners are now in the negatives. The ones that are not, have such low profits that they are considering whether to turn their machines off to wait out the bad times.

The hashrate now is 175 TH/s, which is a 50% drop compared to that in May 2018. This is very very similar to the 2015 drop, from 1.77 TH/s to 0.85 TH/s. Miner capitulation should follow the price capitulation as miners react to the price and turn off their machines over the next weeks.

Another point to consider is the cost of the miners themselves. In January 2018, an Antminer L3+ from the official Bitmain shop cost around $2000 (the price varied based on the batch), with a delivery period in April. At the time of writing, two fresh L3+’s go for the price of one PSU that supports it. That’s right, an L3+ costs fifty bucks. What a bargain. It would be interesting to compare the price drop of miners compared to the last bear market, however, it’s impossible. Historic miner prices are impossible to find online. The irony of blockchain miners relying on oral history, for lack of written history.

Profitability at electricity rates 5c/kWh, courtesy of https://www.asicminervalue.com

The miner scene is much more mature now than it was during last market cycle. However, the narrative remains the same. Retail miners turn off their machines as the price dives as they cannot afford to pay the bills. Eventually, only a handful of strongest hands remain. They either have ridiculously low operational costs (OPEX) or have saved enough money to support their operations. The hashrate then ranges at a fairly constant rate as the market is recovering for a year or two. There will be more people capitalizing on this situation this time around. They will consolidate and buy the miner blood over the next year as the price stabilizes and halving occurs. This is of course a speculation, however, the nature of the market is such that it learns and adapts over each cycle.

In many regards, the industry standard, Bitcoin (BTC) retraced c.82% after the second 2013 bullrun, a drop from $1100 to $200 over about a year and a half. Hashrate, on the other hand, never properly dropped. There never happened a proper drop in hashrate, however, it did stop climbing at a massive rate during the whole of 2015 and the acceleration picked up again in November 2015.

Again let’s compare hashrate to price. After the price topped out, hashrate kept going up at a steady pace increasing by a factor of 2 in about two to three months) after the price topped out. This was followed by a lull where the difficulty of mining increased only by 30%. The hashrate first disregarded and then followed price in the bear market.

What do you think?

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